Recently, everyone is trying to get onto the crypto bandwagon, and now its Facebook’s turn. Facebook has not always been that friendly with crypto. This year in January, Facebook banned all crypto related ads fearing it would lead to scamming of its users, but later in June, it reversed its decision allowing pre-approved crypto ads. Facebook is in trouble as it finds itself unable to create new products that keep its users engaged. This is proven by the fact that the company is buying up rival companies or copying their features. Also, it has been struggling to create revenue streams from its newer acquisitions like Instagram and Whatsapp. Recent user data scandals have put more strain on Facebook’s financials, and the company is struggling to find new sources of income and satisfy its shareholders.
Whatsapp has been trying to push for payment in-app in India through the payment gateway called UPI (Unified Payment Interface). This means that WhatsApp is not a licensed financial institution, so it does not receive, transfer, or store any funds in connection with payments. The user has a separate relationship with their bank regarding bank accounts and settlements. WhatsApp just provides a platform to send money using UPI. India is the first country to support in-app payments on Whatsapp. Although there has not been an official confirmation, many users are able to use the new feature with the latest update. With a user base of 200 million, this new push might actually bring Whatsapp to the number one spot in payment apps, dethroning the current market leader Paytm. Thus, the push for Facebook’s own cryptocurrency may be a hint to Whatsapp’s future as an all in one app.
Facebook’s crypto dreams
Facebook is currently in the process of developing its own cryptocurrency that will go along with its Whatsapp messaging service. This will relieve its users of the hassle involved with the use of banking services as all one would need is somebody’s phone number. The plan is to launch a stable coin to minimize volatility, this is especially helpful in the case of remittance. India is a country with a huge user base for Whatsapp and is at the top when it comes to remittance. Currently, the cryptocurrency is developed by a small team and is nowhere near full release. The 40 members strong blockchain division of Facebook is headed by David Marcus, the former PayPal president, who joined Facebook in 2014 to head its messenger app. Facebook has yet to finalize on the details of the implementation such as who would hold the assets and which currency the new cryptocurrency will be pegged against. A stable coin is pegged against the value of a traditional fiat currency, it doesn’t have a value of its own, unlike Bitcoin or Ethereum. Then why use cryptocurrency rather than traditional currency, many may wonder? This is to reduce the cost and time associated with transferring money using traditional means.
A Super app is an app that can do everything, the best example would be the Chinese app WeChat. In WeChat, one can share stories, get someone to fix your pipe, pay him, and then share it with your friends, who then gets the same person to fix their pipes, as an example. But during all this, the user has not left the app. This is a new class of apps. Although super apps were developed in China, western apps are now trying to copy them to counter the trend of Chinese apps copying apps from western countries outright. WeChat has grown so much that it has grabbed the attention of people even at Silicon Valley. Even though WeChat is not going to enter the western markets anytime soon, Facebook has been monitoring WeChat closely, even inspiring the billion-dollar acquisition of Whatsapp in 2014.
West to copy China
There are many concerns with super apps in western countries, mainly antitrust laws, begging the question if consumers will choose to give all their data to one company. But with an in-app payment option, Whatsapp can start generating revenue and also start resembling something like a super app. Whether it will turn out to be a hit like Wechat is something we will have to wait and watch.
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